As this year draws to a close, it will be remembered less for the recurring economic fluctuations that we’re used to, than for the profound shifts in the way trade and finance are now organised. What was once governed by cost, efficiency and scale has now become unmistakably political. Geography has reasserted itself. Power has followed.

International trade in 2025 continued its steady retreat from the increasingly efficient globalisation system that defined the three decades following the Cold War. In its place has emerged a more cautious, politically informed model of economic decision-making. Boards and management teams now have to weigh up geopolitical alignment, regulatory exposure and strategic vulnerability alongside labour costs and logistics.

An example of this came early on when China tightened export controls on a range of rare earths and the associated technologies. These materials were at the heart of advanced manufacturing, and their absence was palpable. Within weeks, manufacturers across Europe and North America were reporting shortages of permanent magnets and the specialised components essential for electric vehicles, wind turbines and consumer electronics.

European automotive groups warned publicly that production stoppages were no longer a remote contingency but a near-future event. What had previously been treated as a narrow procurement issue was escalated to a board-level concern. The lesson was unambiguous: when a single jurisdiction can disrupt an entire production line with a regulatory notice, efficiency has been turned into fragility.

Corporate behaviour responded accordingly. Across the course of the year, supply chains designed for precision were rebuilt with resilience in mind. Redundancy, once regarded as waste, was now rebranded as insurance. Dual and triple sourcing became commonplace, inventories were reordered and politically sensitive inputs were mapped with a degree of rigour more commonly associated with credit risk.

Governments, for their part, only reinforced this new approach. From Brussels to Washington, policymakers encouraged domestic or regional production of the materials deemed critical to economic security. Comparative advantage, while not abandoned, was increasingly linked to strategic reliability.

If trade routes told one part of the story in 2025, the financial system told another. Access to payments, capital and settlement mechanisms has become, and will continue to be utilised as, an explicit instrument of geopolitical influence.

The European Union’s nineteenth sanctions package against Russia, adopted in October, encapsulated this development. By restricting access to payment networks, fast-settlement systems and crypto-related services, regulators demonstrated that financial plumbing is no longer neutral.

For banks and financial intermediaries, the implications were immediate. What once had been processed automatically now attracted scrutiny. Know-your-customer frameworks grew more exacting, not only to meet regulatory requirements but to manage reputational risk in an environment where mere proximity can carry consequences.

The effects were especially heightened for those firms operating within sanctioned jurisdictions. Access to foreign currency was tightened, correspondent banking relationships became more frayed, and capital markets became effectively unreachable. Even businesses well outside of these sanctioned geographies were implicated. Indirect exposure, from a supplier, customer or even a minority shareholder, was all that it took to nullify the most innocuous of financing arrangements.

Export controls on advanced technologies only reinforced the point. Restrictions on semiconductor equipment and design software functioned not as industrial policy but as financial pressure. They disrupted revenue models, impaired balance sheets and, in some cases, rendered entire whole business strategies unviable.

Such pressure only encouraged adaptation. Throughout the year, U.S. authorities reported a growth in opaque financial structures designed to route transactions through informal channels. Shadow networks flourished where transparency receded. As a result, global capital mobility in 2025 felt more constrained and more conditional than at any point since the early 1990s.

Such fragmentation meant states moved to reduce dependence on any single regulatory centre. The response fuelled the gradual construction of alternative payment systems and market infrastructure spanning multiple jurisdictions.

Russia and China developed alternative settlement terms, increasing the use of the renminbi and routing transactions through intermediaries in neutral states. These mechanisms did not replace the dollar-based system, but they reduced exposure at the margin, which was enough to matter for selected trade flows.

China also pressed ahead with the internationalisation of the digital yuan. The launch of a cross-border digital currency centre in Shanghai was presented as a technical advancement. Still, its strategic intent ensured continued access to liquidity beyond the reach of foreign regulators.

Elsewhere, policymakers explored regional settlement networks that facilitated local-currency trade without recourse to dollar clearing. From Southeast Asia to the Middle East and parts of Latin America, interoperability rather than integration became the guiding principle. Academic research suggests this may lead to loosely connected regional financial clusters in the future, which can operate alongside, rather than within, the traditional Western-led system.

The underlying logic is best understood not through trade metaphors but through the geopolitical lens of connectivity instead. Just as control over airspace or undersea data cables shapes those who can communicate and operate without interruption, authority over clearing and settlement determines who can trade and invest at scale. Redundancy in these systems is no longer a technical preference but a strategic necessity for states looking to access and trade as friction-free as possible.

What has occurred in the past 12 months has highlighted the vulnerability of a model based on interoperability, mutually agreed terms and just financial systems.

Supply-chain resilience is now a prerequisite for competitiveness. Firms that cannot identify and mitigate geopolitical points of failure will find themselves exposed to shocks that are no longer hypothetical but extremely tangible.

Access to finance requires greater sophistication and flexibility. Relationships across jurisdictions, an understanding of sanctions regimes and an ability to navigate compliance complexity are becoming core capabilities rather than fringe, specialist functions.

Governments face a renewed responsibility to support credible financial infrastructure. Dependence on external payment systems now carries strategic risk, while diversification provides agility and insurance.

Finally, investors must react accordingly, taking this macro influence into account. Geopolitics is no longer an overlay to valuation; it is integral to it. Regulatory exposure, settlement access and political alignment are the forces that now shape long-term returns.

Viewed in retrospect, 2025 marked a further step away from the illusion of a frictionless global economy. Trade and finance did not collapse entirely, but they reorganised all the same. Those companies and countries that recognised this early and invested accordingly will enter the coming years better prepared. The world economy has not become smaller, but it has become more segmented. Navigating it will demand judgement, resilience and an acceptance that power, once again, shapes markets as much as markets shape power.

At Arbra Partners, the mission for our investors remains steadfast. We bring a holistic perspective to market trends and geopolitical shifts to offer the clarity, insight and pragmatism that are the hallmarks of successful opportunities, wherever they, or our clients, might be based.